INVESTMENT
Energy Investment: An Alternative Investment Space
Rinkita: Who can invest with EnergyFunders? Is it available to global investors?
Rinkita: Please tell our readers about EnergyFunders and what makes it unique. Mr Racusin: EnergyFunders is an online investment marketplace disrupting the energy industry by evolving the way capital investment and energy projects come together to generate more profitable commerce. We founded EnergyFunders in 2013 in Houston. The fintech company currently offers professionally vetted oil and gas projects as financial opportunities for accredited investors nationwide and internationally, with the goal to soon opens the marketplace to every type of investor. Our team of experienced securities attorneys and trusted specialists in the oil and gas industry allowed us to develop EnergyFunders as the first platform to offer national and global participation in the $263 billion “small oil” market through equity crowdfunding. As a result, investors are able to buy directly into wells and reservoirs for minimums as low as $5,000. With more than 100 wells as assets under management, EnergyFunders has raised millions for energy ventures, bringing unprecedented access, transparency, and efficiency to one of the most elite and lucrative asset classe
Mr Racusin: Yes. For now, accredited investors are welcome. Everyone can sign up for free. In the near future, everyone will be welcome, whether accredited or not, so they’ll have a head start if they already have a free account.
Rinkita: How many deals do you currently have? Please tell us about the top ones. Mr Racusin: We generally strive to put up one deal a month. Of the many deals we initially review, only a very small percentage of deals make it through to the end. Top deals include multi-well packages in Texas and other oil producing American states, such as Kansas. In some cases, these oil fields were formerly operated by household names in the oil and gas industry using technology that’s nothing like what we have today, and that means up to 80% of the oil can be left in the ground. We are focusing more on projects where reserves are already proven, and it’s even better if there’s existing production. How does funding a well work? Do investors actually own a stake in the well? Can they visit? Yes, investors are welcome to visit. We can help them arrange with the operator to visit the property. The investors own a stake in
the well by owning units or interests in a LLC fund or Limited Partnership fund that owns the oil and gas assets.
Rinkita: What are investors earning? What about future potential? Mr Racusin: In most cases, through their ownership in the fund, they are earning a pro rata stake (according to the amount they choose to invest) in an oil and gas lease with development rights, and pro rata ownership stakes in multiple wells that may be reworked to improve or restart production and wells to be drilled, including the various oil and gas facilities like pumps, tanks, tubing, etc. that is purchased or already in use in the well or on the surface. The fund has a type of mineral ownership known as a “working interest” in the lease, the oil and gas assets and in the facilities. They participate in the appreciation of the assets as well as the cash distributions from oil and gas production. Finally, by investing as a “converting general partner,” which is a way to effectively limit liability while providing them with unique oil and gas tax benefits, they can potentially write off against earned income tax, up to 80% of their investment in year one, and then the other 20% over the next several years, even before a drop of oil has been produced.
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